Key findings

In the 12 months to July 2012 UK house prices increased by 2.0 per cent, down from a 2.3 per cent increase in the 12 months to June. House prices remain relatively stable across most of the UK although prices in London continue to increase, whilst Northern Ireland prices are falling.

The year-on-year increase reflected growth of 2.4 per cent in England, which was offset by declines in Scotland, Wales and Northern Ireland of 1.1 per cent, 0.2 per cent and 10.9 per cent respectively.

Annual house price increases in England were driven by a 5.7 per cent rise in London and increases in the East of England and Yorkshire and the Humber of 2.4 per cent and 2.0 per cent respectively. Annual house prices decreased by 1.3 per cent in the North West and 0.5 per cent in the North East.

Excluding London and the South East, UK house prices increased by 0.6 per cent in the 12 months to July 2012.

On a seasonally adjusted basis, UK house prices were unchanged between June and July.

Prices of new dwellings rose by 1.6 per cent during the 12 months to July 2012, while the price of pre-owned dwellings increased by 1.9 per cent in the same period.

In July 2012, prices paid by first-time buyers were 1.8 per cent higher on average than in July 2011. For owner-occupiers (existing owners) prices increased by 2.0 per cent for the same period.

About this statistical bulletin

The Office for National Statistics (ONS) House Price Index (HPI), previously published by the Department for Communities and Local Government (DCLG), is a monthly release that publishes figures for mix-adjusted average house prices and house price indices for the UK, its component countries and regions. The index is calculated using mortgage financed transactions that are collected via the Regulated Mortgage Survey by the Council of Mortgage Lenders.

These cover the majority of mortgage lenders in the UK. The HPI complements other measures of inflation published by ONS such as the Consumer Price Indices, the Retail Prices Index, the Producer Price Indices and the Services Producer Price Indices.

This statistical bulletin provides comprehensive information on the change in house prices on a monthly and annual basis. It also includes analysis by country, region, type of buyer (first-time buyers and former owner-occupiers) and type of dwelling (new dwelling or pre-owned dwelling). Historical series for all accompanying tables that transferred from DCLG are also available in the data section of this release.

The figures published in this release are not seasonally adjusted unless otherwise stated.

House Price Index UK summary

UK average house prices increased by 2.0 per cent over the year to July 2012, compared with an increase of 2.3 per cent in the year to June 2012. The average UK mix-adjusted house price in July 2012 was £234,000.

Figure 1 - UK all dwellings annual house price rates of change

12 month percentage change

Notes:

Download chart

On a seasonally adjusted basis, average house prices were unchanged over the month to July 2012 compared with an increase in average prices of 0.3 per cent in July 2011.

Table A - House Price Index - July 2012 - Summary of UK all dwellings

Index - February 2002=100

House Price Index, UK All Dwellings

Index

% 12 month change

Index

% monthly change

£

Not seasonally adjusted

Not seasonally adjusted

Seasonally adjusted

Seasonally adjusted

Not seasonally adjusted

2011

Jan

174.5

0.1

173.7

R

-0.8

R

216,000

Feb

171.1

-0.2

173.4

R

-0.2

R

212,000

Mar

173.2

0.3

175.4

R

1.1

R

215,000

Apr

172.6

-0.7

173.6

R

-1.0

R

214,000

May

171.1

-2.5

172.1

R

-0.9

R

212,000

Jun

173.1

-2.3

172.7

R

0.4

R

214,000

Jul

175.6

-1.6

173.2

R

0.3

R

217,000

Aug

176.0

-1.5

173.7

R

0.3

R

218,000

Sep

175.2

-1.6

173.1

R

-0.3

R

217,000

Oct

174.2

-0.5

174.1

R

0.6

R

216,000

Nov

173.8

-0.5

174.0

R

-0.1

R

215,000

Dec

173.0

-0.4

174.4

R

0.2

R

214,000

2012

Jan

175.5

0.6

174.8

R

0.2

R

229,000

Feb

172.8

1.0

175.2

R

0.2

R

226,000

Mar

172.6

-0.4

174.7

R

-0.2

R

225,000

Apr

175.1

1.4

176.1

R

0.8

R

229,000

May

175.1

2.3

176.1

R

0.0

R

229,000

Jun

177.2

2.3

176.8

R

0.4

R

231,000

Jul

179.1

2.0

176.7

0.0

234,000

Table source: Office for National Statistics

Table notes:

Prices rounded to the nearest £1,000.

Average house prices are not comparable between years as they reflect a different mix of houses being transacted. Indices have been chain linked so they are comparable year-on-year. For more information see the re-weighting section in the background notes.

Seasonally adjusted figures have been revised following the implementation of the annual seasonal adjustment review.

Download table

House Price Index by country

During the year to July 2012, average house prices increased in England by 2.4. However, prices decreased in Northern Ireland by 10.9 per cent, in Scotland by 1.1 per cent and in Wales by 0.2 per cent.

Figure 2 - Country all dwellings annual house price rates of change

12 month percentage change

Source: Office for National Statistics

Notes:

Not seasonally adjusted.

Data collected via the Regulated Mortgage Survey.

Download chart

House Price Index by region

Average house prices increased in seven of the nine English regions over the year to July 2012. The largest increase was in London at 5.7 per cent, followed by the East of England at 2.4 per cent and Yorkshire and the Humber at 2.0 per cent. These increases were offset by a 1.3 per cent decrease in the North West and a 0.5 per cent decrease in the North East.

Figure 3 - Regional all dwellings annual house price rates of change

12 month percentage change for July 2012

Notes:

Download chart

Average house prices in countries and regions

Average mix-adjusted house prices in July 2012 stood at £242,000 in England, £159,000 in Wales, £130,000 in Northern Ireland and £183,000 in Scotland.

In July 2012, London continues to be the English region with the highest average house price at £397,000. The North East had the lowest average house price at £145,000. London, the South East and the East of England all had prices higher than the UK average price of £234,000.

Excluding London and the South East, the average UK mix-adjusted house price was £188,000.

Figure 4 - Mix-adjusted average house price: UK, country and region

Prices for July 2012

Source: Office for National Statistics

Notes:

Not seasonally adjusted.

Data collected via the Regulated Mortgage Survey.

Download chart

House Price Index by type of buyer

The average price for properties bought by first-time buyers increased by 1.8 per cent over the year to July 2012, compared with an annual increase of 3.1 per cent in June 2012. During July 2012 the average price paid for a house by a first-time buyer was £174,000.

The average price for properties bought by former owner-occupiers (existing owners) increased by 2.0 per cent in the year to July 2012, compared with an increase of 2.1 per cent in June 2012. In July 2012, the average price paid for a house by a former owner-occupier was £269,000.

Figure 5 - UK annual house price rates of change: type of buyer

12 month percentage change

Source: Office for National Statistics

Notes:

Not seasonally adjusted.

Data collected via the Regulated Mortgage Survey.

Download chart

House Price Index by new and pre-owned dwellings

During the year to July 2012 prices paid for pre-owned dwellings increased by 1.9 per cent on average, compared with an increase of 2.1 per cent in the year to June 2012. The average UK house price for pre-owned dwellings in July 2012 was £235,000.

During the year to July 2012 prices paid for new dwellings increased by 1.6 per cent on average, compared with an increase of 5.9 per cent in the year to June 2012. The average UK house price for new dwellings in July 2012 was £213,000.

Figure 6 - UK annual house price rates of change: type of dwelling

12 month percentage change

Source: Office for National Statistics

Notes:

Not seasonally adjusted.

Data collected via the Regulated Mortgage Survey.

Download chart

Data tables

ONS HPI monthly and quarterly reference tables (numbers 1 to 19). (3.17 Mb Excel sheet)
This reference table provides full historical series for the monthly tables accompanying the House Price Index statistical bulletin. This month, tables 1 to 9 have been updated with the latest monthly data for July 2012. The seasonally adjusted figures in Table 7 have been revised this month as scheduled. This reference table also contains all the quarterly live tables transferred to ONS from DCLG. Please note that during the transfer ONS renumbered the live tables. Full details of the new table numbers and their corresponding DCLG table numbers can be found in the 'contents' page of the reference table.

Background notes

New this month

Transfer of HPI from DCLG to ONS

Following the announcement by the National Statistician on the 9 December 2011, the House Price Index (HPI) has now been transferred from the Department for Communities and Local Government (DCLG) to the Office for National Statistics (ONS). From the February 2012 publication onwards, ONS took responsibility for the publication of the HPI statistical bulletin and a number of supporting tables.

The tables transferred were A1–A7, 502–508, 511–517, 521, 523, 534–540, 557, 571, 572, 590–594. DCLG will continue to produce and publish the remaining housing market live tables (tables 580–588) including those on housing affordability based on Land Registry data.

The ONS HPI was previously seasonally adjusted by subtracting seasonal factors from the unadjusted series. Seasonal factors were estimated on an annual basis and forecast 12 months ahead. From this publication onwards, seasonal factors will now be estimated on a monthly basis and not forecast. This methodological change follows from the latest annual review of the seasonal adjustment process and brings the HPI in line with ONS best practice. As a result of this change the accuracy of the seasonally adjusted figures in Table 7 will improve. Implementing this change in seasonal adjustment methodology has resulted in small revisions to the seasonally adjusted indices going back to February 2002.

Taking forward the recommendations from the National Statistician’s review of UK house price statistics

In December 2010, the UK National Statistician published a review of UK house price statistics. The review report recommended that the producers of official housing market statistics should work together to produce a regular combined statistical release containing the main official measures of house prices and consider the development of a definitive official measure.

Since the successful transfer of the house price index to ONS in March 2012, initial discussions have taken place between the main producers of official house price statistics to identify what work is required to take forward the recommendations of the review. The departments involved in these discussions are Land Registry for England and Wales, Registers of Scotland, Northern Ireland Department of Finance and Personnel and the Office for National Statistics.

It has been agreed that ONS will take the lead in the development of its House Price Index (HPI) to become the National Statistic for house prices. This lead house price index will be the measure that best meets the majority of the criteria laid out in the review report. The remaining official house price indices, which are likely to be timelier than the National Statistic, will continue to be published in their current format. Work will be carried out to better explain how these indices will sit alongside the National Statistic and provide fuller commentary that brings together each official measure.

During the rest of 2012, development will focus on investigating the potential options for improving the coverage of the ONS HPI to include those houses purchased without a mortgage (cash sales). A suitable methodology will be investigated so that the index can be updated to include cash sales in 2013. Any potential change to the ONS HPI as a result of this work will be pre-announced and subjected to an appropriate user consultation as laid out in the code of practice for official statistics.

Additionally, ONS will be publishing an article towards the end of 2012 that fully documents the methodology and data sources used to produce the ONS HPI and better explains the benefits in having specific indices (for England and Wales, Scotland, and Northern Ireland) as well as a National Statistic.

Relevance of the ONS House Price Index

The ONS HPI is an important measure of house price inflation for the UK and together with the Land Registry HPI, it is one of the main house price indices used by central and local government to support decision making in the UK. Other users include private individuals, surveyors and analysts in financial institutions.

The ONS HPI is also an important input into the housing cost component of the Retail Prices Index (RPI). Each month a customised HPI delivery is produced using a sub-sample of the full data set for use in the RPI.

Revisions policy

At the end of every quarter, as well as releasing final figures for the latest month, ONS revises the figures from the previous two months. This is done because some mortgage lenders, which account for 1 to 2 per cent of all records, provide their data on a quarterly rather than monthly basis. Additionally, data will be revised for the previous month if more than 1,000 additional cases are received in a subsequent month.

Other revisions to historical data (other than those currently due for revision) will be made only if the revision is substantial.

In all cases, the revised figures are labeled with a 'R' and the reason for the revision explained under the 'New this month' section of the background notes.

Methodology

Data sources

Since October 2005 the ONS HPI (formerly the DCLG HPI) has been based on a sample of mortgage completions data from the Regulated Mortgage Survey (RMS) as collected by the Council of Mortgage Lenders (CML).

The number of transactions received from the RMS is affected by the total number of mortgages completed for house purchase in any period. During 2011 the sample covered 65-70 per cent of all UK mortgage completions.

Price methodology

The ONS HPI is mix-adjusted to allow for differences between houses sold (for example type, number of rooms, location) in different months within a year. House prices are modelled using a combination of characteristics to produce a model containing around 100,000 cells (one such cell could be first-time buyer, old dwelling, one bedroom flat purchased in London). Each month estimated prices for all cells are produced by the model and then combined with their appropriate weight to produce mix-adjusted average prices. The index values are based on growth rates in the mix-adjusted average house prices and are annually chain linked. More information on the model used is available on the DCLG website.

Re-weighting

The ONS HPI is a weighted Laspeyres-type index. In January of each year the index weights are updated based on the relative numbers of transactions during the previous three years, which are grossed to total transactions obtained from Land Registry. Applying new weights ensures that the index keeps up to date with changes in the types of properties that are being purchased, and therefore reflects the price of the average property.

One consequence of changing the weights every year is that the mix-adjusted house prices cannot be compared between years as the weights are different. The index itself is constructed on a chain-linked basis, which enables year-on-year comparisons to be made. This means that the year-on-year change in the index for June 2011, say, is effectively the change in the average price from June to December 2010 (using the weights for 2010) combined with the change in the average price from January to June 2011 using the weights for 2011. Therefore, the year-on-year change in the index is not the same as the year-on-year change in the mix-adjusted average price. More information on the HPI methodology is available on the DCLG Website.

Seasonal adjustment

The housing market shows seasonal effects that affect house prices. For example, prices have tended to be higher during the summer months than during the winter months. These seasonal effects are estimated and adjusted for in order to calculate month-on-month price changes. Seasonally adjusted figures are provided at a national level in Table 7 alongside the non-seasonally adjusted figures of the other tables. Seasonal adjustment is performed each month and reviewed each year, using the standard and widely used software X-12-ARIMA. Seasonally adjusted house price estimates are used to report monthly percentage changes. All other figures such as annual rates of change and average house prices are based on non-seasonally adjusted estimates, unless otherwise stated.

Other house price statistics

Currently there are a number of different sources of house price statistics published in addition to the ONS HPI. There will be differences in the data published by each source as there are differences in both the data and methodology used. Therefore the ONS HPI is not directly comparable with these other indicators.

Land Registry House Price Index

All residential property transactions in England and Wales are recorded by Land Registry. These transactions are used for calculating the Land Registry index. This index is based on repeat-sales regression, which calculates the change in price of any property transacted twice since 1995. Therefore new build properties are excluded from the index. Land Registry publishes indices at a sub-regional level. The Land Registry HPI is normally published on the 20th working day of every month, and refers to all transactions of the preceding month.

Registers of Scotland records all the property transactions in Scotland. It produces a housing price index based on arithmetic means of these transactions, which is published as the Registers of Scotland House Price Index in the second month after the month to which the figures refer to.

Northern Ireland Residential Property Price Index

The Land & Property Services assisted by the Northern Ireland Statistics & Research Agency (NISRA) publish a quarterly Residential Property Prices Index (RPPI) for Northern Ireland. The index measures change in the price of residential property sales recorded by Her Majesty's Revenue & Customs. This is a new official statistic, first published in quarter 1 of 2012.

Halifax House Price Index and Nationwide House Price Index

Both Halifax and Nationwide produce house price indices based on their own mortgage approvals only and therefore, like the ONS HPI, will not include any cash transactions. They both have UK-wide coverage, and since the Halifax and Nationwide use only their own in-house data they can process them immediately and do not have to await the receipt of data from other lenders . This means that they are more timely than the ONS HPI.

LSL Property Services/Acadametrics House Price Index

The LSL Property Services/Acadametrics HPI is the only house price index to reflect all transactions, as opposed to data samples, and provides mix and seasonally adjusted results at national, regional and county/unitary district/London borough levels

In addition, other indices are also produced. Rightmove tracks the asking prices of properties in its website and the Royal Institute of Chartered Surveyors (RICS) produces an opinion survey of its surveyors regarding the direction that prices are moving in.

This bulletin includes the July 2012 data. Future publication dates for this statistical bulletin are available via the ONS Publication Hub.

General

Details of the policy governing the release of new data are available from the Media Relations Office. Also available is a list of the names of those given pre-release access (26.9 Kb Pdf)
to the contents of this release.

The production of the HPI has been transferred from the Department for Communities and Local Government (DCLG) to the Office for National Statistics. The historical releases of the DCLG HPI and their corresponding tables can be found at the DCLG website.

National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.